Many crops can be fickle when it comes to unpredictable weather or the targets of accidents and wild animals. If crops are a main source of revenue for your farm, crop insurance is crucial. Crop insurance as part of a farm insurance policy can provide compensation if your crops are lost or damaged due to an incident.
There are many facets of farm insurance—including livestock, buildings and equipment—but here, we’ll focus on protecting your crops. Crop insurance protects the investment you’ve made, along with the revenue you may have lost, in the event that a covered event has a negative impact on profits. The three main types of crop coverage include:
1. Named peril: Protect your crops from the factors that are most likely to destroy them. For instance, if you work in a very dry location, you may choose to list fires on your policy since the risk of fire may be high. With this type of coverage, your crops are protected only from the perils specifically named in your policy.
2. Multi-peril: Open up your policy to cover a wider range of risks. This type of coverage offers broad crop protection in the event of drought, flooding, fire, insects, disease, hail, wildlife, freezing and other types of damage.
3. Revenue: This type of coverage is a little more involved because it’s based on how much your revenue deviated from average revenue. The Risk Management Agency will consider the price a crop should sell for, along with how much you expect to harvest, to determine your estimated revenue. If a covered event prevents you from earning that dollar amount, this policy can help make up the difference.
Every farm is different and your farm insurance policy should be tailored specifically to fit your farm’s needs. Speak with your insurance agent about the right amount of crop insurance. Also ask about additional coverage for other areas of your farm such as general liability, product liability, commercial property, livestock insurance, farm equipment insurance and more. Farms stand a lot to lose when it comes to day to day operation, so make sure your risks are covered and your farm protected with the right insurance.